FHA made some substantial changes to the underwriting guidelines that went into effect with FHA Case Numbers assigned after 9/14/15. If you are a buyer that is "pre-qualified or pre-approved", now is the time to confirm with your Mortgage Loan Originator that you are still pre-qualified or pre-approved if you have not yet made your purchase.

The biggest change that will impact these pre-qualification for most first time home buyers is the position regarding student loans. Now, regardless of deferment, the payment must be included in the debt to income ratio (DTI). If no payment is listed on the credit report, an estimated payment of 2% of the outstanding balance will be used. As an example, a $50,000 student loan will have a monthly payment of $1000.

FHA mortgage which are typically used by first time home buyers, may now find they have less buying power or find themselves out of the housing market altogether.

The second change that will impact the Debt to Income Ratio applies to non-taxable income such as social security/disability income. In the past, guidelines allowed 25% gross up, that has now been reduced to 15%.

In the ever changing world of mortgage lending, knowing the details upfront will save you time, money and heartache.

Remember, these changes are effective with case numbers assigned after 9.14.2015. If your loan is already in process, the previous guidelines apply.

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The opinions and general information in this blog are soley those of Kathy Sheehan. Specifics regarding an individual case should be discussed in detail with a loan professional. For a confidential consultation, please feel free to contact me via phone or email. All terms and conditions are subject to change.